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Old 05-10-2022, 04:55 AM   #21
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So tired of clickbait about which generation is worst at X, Y, or Z. We all go through similar stages of learning how to deal with life, are tempted by different things at different times, etc.

When I first encountered "free credit" in my 30's, I almost turned it down because I thought there had to be some catch (well there is: you have to pay on time). But the terms were clear: Make your monthly payments and you'll pay no interest. Miss a payment, and gotcha!

Worked for me. We bought furniture and even some jewelry that way.
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Old 05-11-2022, 08:22 AM   #22
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Originally Posted by Koolau View Post
IIRC personal credit card debt is a bit less than half the personal saving number (sorry, no source.) Of course, some folks have savings and CC debt, so there's that.

I have no idea what % of folks behave as ponyboy suggests and how many behave as MichaelB suggests. I DO know personally several folks that would suggest ponyboy may be more correct than not. My BFF that is $500K in debt at 77 is exhibit one. He has never been able to wait for gratification. I've often counseled him that simply saving up FIRST would actually allow him to own many MORE things since he would not have to pay interest (and might even earn a bit of interest.) He agreed, but never did it. YMMV
Personal anecdotes may influence one’s views but hard data is critical, and quite useful. Federal Reserve data show US household balance sheets improved substantially from 2019 to 2021. As pandemic related economic concerns rose people reacted by decreasing consumption and increasing savings. Transfers from gov’t added to savings. See here https://www.federalreserve.gov/relea...e_sheet/chart/

According to the NY Fed quarterly survey on household dept, credit card balances declined in 1Q and are still below their peak in 2019. https://www.newyorkfed.org/medialibr...hdc_2022q1.pdf
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Balances
Mortgage balances shown on consumer credit reports increased by $250 billion during the first quarter of 2022 and stood at $11.18 trillion at the end of March. Balances on home equity lines of credit (HELOC) were relatively flat and have been for the past 3 quarters, bucking a declining trend in place since 2016Q4; the outstanding HELOC balance stands at $317 billion. Credit card balances declined by $15 billion, a typical seasonal change. Credit card balances had declined significantly in the first year of the pandemic and remain $86 billion lower than at the end of 2019. Auto loan balances increased by $11 billion in the first quarter. Student loan balances now stand at $1.59 trillion, and increased by $14 billion in the first quarter of 2022. In total, non-housing balances grew by $17 billion, boosted additionally by a $7 billion increase in other balances, which include consumer finance loans, retail cards, and unclassified loans.
The household debt to GDP ratio has increased over its 2019 low, but still shows a consistent and substantial decline over the past 10 years https://fred.stlouisfed.org/series/HDTGPDUSQ163N

Anyone interested in more detail wil find a treasure trove of data at the different Federal Reserve Banks, and here is pretty good and easy to read analysis by Brookings Institute https://www.brookings.edu/research/b...es-since-2019/

The data show US household finances have been on a steady path of improvement since the GFC. Savings are healthy and increases in mortgage debt have been mostly taken in by households with high credit worthiness.
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Old 05-11-2022, 08:52 AM   #23
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Those plans are worrisome.

Not just to Generation Z either.

Just take a look a the consumer credit numbers by demographic-specifically the 45-65 demographic. It is very revealing.

When we first got married every stick of furniture we had was either hand me down or second/third hand.

SIL got married at the same time. Everything brand new, purchased on consumer credit. Three years later they were bankrupt and blamed it on their credit card issuers and consumer finance loans. Go figure.

We retired at 58/59, financially independent. She is still working in her late sixties, operating two vehicles, and depends on reverse mortgage to remain in their home.

This is not a new story. Just a different way to hook people into the consumer credit trap.
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Old 05-11-2022, 09:52 AM   #24
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I find interesting the way some people will turn up their noses at anything not flashy and new (even if it's not the highest quality), while others will ooh and aah over good, older furniture and restored items.

It's as if having good taste can help determine your financial future.
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Old 05-11-2022, 10:51 AM   #25
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And these days I'm not sure where I'd be able to invest at 2 or 3% without some risk!
US Treasuries.
The federal debt-to-revenue ratio is 7.6x, meaning it would take the government over 7 and a half years to pay off its existing debt, if 100% of revenue went to servicing the debt.

With that in mind, it's very debatable whether Treasuries are truly risk-free.
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Old 05-11-2022, 03:56 PM   #26
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The federal debt-to-revenue ratio is 7.6x, meaning it would take the government over 7 and a half years to pay off its existing debt, if 100% of revenue went to servicing the debt.

With that in mind, it's very debatable whether Treasuries are truly risk-free.
So BFF is actually in better shape than the gummint (except he can't print money.) His ratio is more like 6x. Of course, at age 77, he never really plans to pay it off - just like the gummint. I guess he learned from the experts.
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Old 05-11-2022, 06:27 PM   #27
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Some people apparently think if you die in debt, you win.
The bigger debt, the better.
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Old 05-12-2022, 12:56 AM   #28
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Some people apparently think if you die in debt, you win.
The bigger debt, the better.
Yeah, I think BFF was the one who first said "He who dies with the most toys wins!" As far as I know he has very little life insurance and I have no idea how his DW will deal with his death. Full disclosure: She's is a big part of why he (they) are in such deep debt. She has a spending addiction just as he does. Her spending is mostly "small" items while his are a few big toys. It's a marriage made in heaven.
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Old 06-06-2022, 11:47 AM   #29
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Oh my...thanks for sharing, Ko'olau! And I'm a big fan of the Law described in your sig

MC Rider - reminds me of the tagline on the book Die Broke by Stephen M. Pollan and Mark Levine, which read "The last check you write should be to the undertaker—and it should bounce!" That tagline was so inflammatory, I almost didn't read it! But fortunately, there was a lot more wisdom in that book than in the tagline and title.
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